Azov-City shuts its doors for good

January 7, 2019

Russian first gambling zone, Azov-City officially closed its doors on December 29 after eight years of existence, local media reports.

Days before its closure, its investors – Royal Time LLC and Royal Time Group LLC – filed lawsuits with the Moscow Arbitration Court, demanding RUB 5.9 billion (US$87.3 million) from the Russian Finance Ministry and the Department of Property Relations of Krasnodar Region.

Another investor, Shambala LCC has filed a lawsuit against the Krasnodar Territory administration demanding RUB 3 billion compensation for not being included in the law on compensating damages to investors in Russian gambling zones.

The lawsuit will be considered by the Krasnodar Territory court on January 16, 2019

Nikolay Oganezov, chairman of the subcommittee of the Chamber of Commerce and Industry of the Russian Federation on betting activities blamed the closure on regional authorities, alleging that they did not want to develop fair competition in the region.

“Initially, 2,000 hectares were allocated for the gambling zone. However, in the end, only three gambling facilities operated there. It turns out that the regional authorities were not interested in the development of fair competition between operators. If gambling operators had had fair access to this territory and received construction permits, there could already be a mini-town along the lines of the Kamskiye Polyany in Tatarstan [which existed before a crackdown on casinos in 2009], where 15 facilities operated in a small gambling zone. Moreover, if there were 15 casinos in Azov-City, it would be more difficult to close it.”

The decision to liquidate the Azov-City gambling zone was announced soon after the 2014 Sochi Olympic Games in view of the creation of another gambling zone in Sochi. Russian Deputy Finance Minister Alexei Moiseyev explained that the Azov-City liquidation was postponed for three years in order to compensate for damages incurred by investors through profits they will gain during this period.

The zone started to operate in 2010, with the local administration investing in its implementation RUB 1 billion – and the two investors – Shambala and Royal Time – RUB 6 billion more.

At the end of December 2018, President Vladimir Putin signed a law on compensation to investors and gambling organizers in the event of the closure of gambling zones or due to changes in their borders, which does not include Azov-City.

Such compensation will be possible if the decision to liquidate or change the boundaries of the gambling zone was made on the basis of federal law before 10 years will pass since its creation. The sum will be determined by the Russian government and be transferred from the federal budget to the budget of the constituent entity where the zone is located.

But if the decision is taken after ten years will pass since its establishment, the losses of investors and gambling organizers will not be reimbursed. But its closure or change of boundaries will only be possible not earlier than three years after such a decision is taken.

Asia Gaming Brief is an intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia. AGB's extensive network of regional advisors ensures that the intelligence you receive is real, topical and based on fact.